A firm with a 13% cost of capital must select the optimal group of projects from those shown in the following table, given its capital budget of $1 million.

a. Calculate the present value of cash inflows associated with each project.
b. Select the optimal group of projects, keeping in mind that unused funds arecostly.

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NPV at 13% cost of capital Projcct Initial investment $300,000 200,000 100,000 900,000 500,000 100,000 800,000 $ 84,000 10,000 25,000 90,000 70,000 50,000 160,000